Impact of the War on Iran on Pakistan’s energy diversification and independence approach

Pakistan, which imports 80% of its oil through the Strait of Hormuz, found itself at the epicentre of an energy crisis after the outbreak of the US war against Iran — and is now rapidly restructuring its energy strategy through diversification, domestic production, and renewables.

Pakistan’s economy had previously seemed to be recovering in 2026; however, rising energy and oil prices have added to Pakistan’s import costs, leading to slower growth. Energy crises and disruptions in supply chains, rising fuel prices, rising electricity generation costs, shortages of liquefied petroleum gas (LPG), etc., have weakened the country’s energy sector.

Pakistan Government Approach

Energy security has a central and strategic position in Pakistan’s foreign policy and is one of the main priorities of Pakistan’s foreign policy, at the center of the country’s economic and security diplomacy.

In recent years, the discovery of oil and gas fields in the offshore areas of Indus and Makran has created a bright future. Oil reserves in Pakistan have increased by 26 percent, and gas reserves by 2 percent, by the end of the fiscal year.

Pakistan’s proven oil reserves are currently estimated at around 353 million barrels, with nine billion barrels of recoverable shale oil and 235 trillion cubic feet of gas reserves. To reduce its energy dependence, the Pakistani government has decided in recent months to intensify exploration operations, sign contracts and tenders, and invite foreign investors in domestic oil and gas.

Pakistan has practically no strategic oil reserves, and its strategic oil reserves are only for 5 to 7 days. Therefore, in recent months, Pakistan has emphasized the need to strengthen energy storage infrastructure, improve strategic reserve capacity, and increase resilience to potential crises in the global energy........

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